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What is Industrialized Countries

Understanding what constitutes an industrialized country is predicated on both knowing a given nation’s level of industrialization as well as understanding the process by which industrialization occurs. A nation’s level of industrialization concerns the extent to which its economy is based on manufacturing, construction, and other industrial activity. The process of industrialization most typically entails the transition from a low-tech, small-scale agricultural economy wherein the majority of persons are engaged in self-sustaining farming activity in rural areas to one in which high numbers of persons are employed by large-scale, heavily mechanized, and highly efficient goods and/ or services manufacturing organizations located in urban areas. An industrialized country is thus one (1) that has undergone the process of industrialization, and (2) that has an economy based heavily on manufacturing, construction, and other industrial activity. An industrialized country could, at least in theory, be self-sufficient and not heavily involved in trade with other nations. However, given both the fact that any one country is unlikely to possess all resources needed to be self-sufficient as well as the increasingly interconnected and interdependent nature of today’s global economic system, the most industrialized nations for example, Japan, Canada, Germany, the United Kingdom (UK), and the United States are typically also heavily involved in importing, exporting, and other aspects of international commerce. In fact, it is these highly industrialized nations that comprise what is known as the core of the global economic system from which emanates the majority of global economic activity.
There are at least three basic reasons why knowing whether or not a country is industrialized is of critical importance. First, level of industrialization is typically closely related to a nation’s level of economic development. The relationship is most generally thought to be linear and positive the higher the level of industrialization the higher the level of economic development. Although it cannot be said with absolute certainty that industrialization causes development it does appear that industrialization is one of several key factors leading to economic growth characterized by: (1) a significant increase in average per-capita gross domestic product, (2) an increasingly widespread and even distribution of income and wealth, and (3) significant increases in consumer demand. In fact, industrialization is typically considered to be both a prerequisite for economic development and the primary driving force behind the recent rise of nations such as Brazil, Mexico, South Korea, India, China, Taiwan, and other newly industrialized countries (NICs) up the ladder of development and toward a place of greater prominence in the global economic system.
A second reason why knowing whether or not a country is industrialized is important is that level of industrialization is the primary factor in the widely used classification scheme devised by the United Nations to group the nations of the world into “more-developed,” “less-developed,” and “least-developed countries.” Finally, and arguably of greatest relative importance, knowing whether or not a given nation is industrialized tells you a lot about the basic character of that nation. If, for example, a country is industrialized one can be fairly certain that the country in question: (1) possesses an economy based on manufacturing, construction, and other industrial activity; (2) is heavily involved in international trade (and the global economic system); and (3) has, as manifest in the United Nations categorization system, at least a relatively high level of economic development.
It should be noted, however, that the nature and consequences of industrialization are not as simple as perhaps suggested above. For example, although the term Industrial Revolution is commonly used to describe the industrialization of both the United States and what is today known as the UK beginning the mid-late 18th century, it is appropriate to consider the tumultuous changes that began at that time as but the first of several industrialization-driven revolutions that have significantly altered the economic and social character of many nations over the course of the last 250 years. In addition, the fact that recent and/or ongoing industrialization-driven development of NICs often differs dramatically from that of nations such as the United States and the UK suggests that the process is not as homogeneous as many have long thought. Further, industrialization does not, in and of itself, necessarily lead to rapid widespread prosperity for a nation and its people. Finally, there are typically serious negative consequences associated with the industrialization process that should not be ignored. Overall, the process of industrialization should be viewed as being highly complex in nature. The consequences of this process should likewise be seen as intricate and, thus, difficult to accurately predict. Perhaps most importantly, it should be understood that neither industrialization nor its development-related (and other) consequences occur overnight it can take well over a century for the process and its outcomes to be fully realized in any given country. The traditional view of industrialization is based on the process as manifest in both the United States and the UK. This is in contrast to the ongoing industrialization-driven development of China and other NICs.
The United States and the United Kingdom
The first of as many as three periods of industrial revolution typically referred to as The Industrial Revolution began initially in what is today the UK and then in the United States in the mid-late 18th century (with 1760 often being considered as the “start date” of the process in the UK). In both nations, the process of industrialization involved (and was fueled by) both the creation and implementation of machinery for the highly efficient mass production of goods as well as dramatic expansions of transportation infrastructures (mainly railroad). Just as importantly, the Industrial Revolution and the resultant industrialization of both the United States and the UK involved the mass migration of hundreds of thousands of persons from self-sufficient agrarian existences in rural areas into burgeoning urban environments where they ran the new machines of the new mass production driving industrialization.
The rural/farming-to-urban/mechanized goods production transformation wrought by the original Industrial Revolution was so significant that it is often said that the modern form of capitalism serving as the backbone of today’s global economic system began with the start of this revolution. Adequately describing the overall magnitude of the change involved is difficult. However, consider the case of the textile industry in the UK as being exemplary of two key consequences of the Industrial Revolution in that country the transformation of both (1) the manner in work is done and (2) the way goods are produced. Before the onset of the Industrial Revolution, the majority of clothing was self-produced in homes. This process was tedious and highly inefficient. Think, in this regard, what it would be like today if most people produced their own clothing. Think, for example, about the time and effort involved in finding and acquiring the right raw materials (e.g., raw cotton and wool) and then processing these materials thread by tedious thread into the clothing you wear by hand. Now think about this being done in almost every household in the UK. The gross inefficiencies involved in such a scenario should be obvious.
The character of clothing production in what is today the UK changed dramatically in the mid-1760s with the development of the “jenny.” This mechanized device allowed the operator to simultaneously work with dozens of threads and produce a finished piece of clothing in a fraction of the time that could be achieved by an individual working by hand. By the late 1780s, nearly 20,000 “Jennys” were in use in factories across the UK. Gone were the days of inefficient domestic production. Highly efficient clothing factories along with factories in scores of other developing industries spread across the country. People moved in mass from rural areas to the cities to work in the factories where they could make far more money and live, in at least material terms, better lives.
Suggested above is the fact that industrialization changes both the basis of national economies and the manner in which people in industrialized nations most commonly work (i.e., from self-subsistence agricultural and domestic work in rural areas toward mechanized, third-party manufacturing in urban locales). Quantifying the magnitude of this shift in both the UK and the United States is challenging. Consider, however, that it is estimated that in the United States in 1810 nearly 85 percent of the workforce was engaged in agricultural activities, with only three percent involved in manufacturing. By 1960 only 8 percent of the workforce in the by then nearly fully industrialized United States was engaged in agriculture, with the share for manufacturing rising to almost 25 percent. By 2006 the percentage of U.S. workers involved in agricultural activities had shrunk to under 2 percent down from 85 percent shortly after the start of the Industrial Revolution.
Needless to say, the transformation involved in the original Industrial Revolution includes major change not only in the way that most people worked, but also in the way they lived. Prior to industrialization, most people in the United States lived in rural areas and produced needed goods and services themselves and large portions of their time were spent in their homes and immediate communities engaged in this (grossly inefficient) self-production. With industrialization came the onset of urban masses engaged in highly efficient, mechanized manufacturing and factory work and the means to acquire these third-party-produced goods. In addition, along with the use of machinery in factories all across the United States and the UK came significant increases in demand for and consumption of such factors of production as coal, iron, and transportation and large industries built around each factor.
The most widely discussed outcomes of the Industrial Revolution for the United States and the UK are great increases in (1) both worker productivity and manufacturing efficiency and (2) national and per-capita income, gross domestic product (GDP), and other measures of material wealth. With regard to the latter, it is often noted that the United States and the UK are today and have for decades been among the wealthiest nations in the world and that this is an outcome of having been industrialized for a relatively long period of time. Consider, for example, that although only about 5 percent of the world’s population resides in the United States, this country accounts for (1) over 25 percent of global wealth and (2) nearly 22 percent of the world’s GDP. This is commonly attributed largely to the manner in which people work as well as the way in which goods and services are produced all products, ultimately, of the Industrial Revolution.
Critiques
However, it is important to note that there was also a clear downside to Industrial Revolution-era industrialization as manifest in both the United States and the UK. Throughout more than the first 100 years of the Industrial Revolution, the urban areas in which more and more people lived became overcrowded and heavily polluted while the factories that hundreds of thousands of people flocked to for work were far from what could be called “worker-friendly” Factories of the period were often largely unregulated, with poor ventilation, dangerous levels of noise, and poor lighting. Much of the highly efficient machinery was also often very dangerous to operate. Workers often worked 12-to 14-hour days in these often horrendous conditions. As a result, critics charge that the positive outcomes of the Industrial Revolution were not evenly distributed. They claim, specifically, that the great material wealth generated landed disproportionately in the hands of factory owners and executive managers for manufacturing corporations while the workers toiled long hours in poor working conditions for relatively little pay.
Another commonly discussed negative outcome of the Industrial Revolution, particularly in the United States, is the ultimate effect of industrialization on the family. Throughout much of the 20th century, it was widely assumed that industrialization had been the key causal factor leading to the virtual destruction of the traditional family structure in the United States. This “destruction” was seen, for example, in increasingly widespread marital disharmony and instability as well as weakened ties with extended family members.
Although the idea of the industrialization-driven destruction of the U.S. family appears to have been exaggerated by many commentators, industrialization does appear to have indeed created dysfunctional strains on the family and at least the potential for familial disintegration. These strains most typically arose via industrialization driving the migration of many people from agrarian jobs in rural areas to factory and other goods-manufacturing jobs in urban areas. When this movement occurred, the priority of the father/husband is said to have shifted from the family itself to work. Although it can certainly be said that this work was engaged in for the betterment of the family, the new focus on work and working for a company rather than family- or community-based work is theorized to have changed the essential manner in which fathers/husbands interacted with other family members. It has been noted, in this regard, that industrialization was a significant contributing factor to both (1) a lesser amount of parental control being exercised over children (due to not having as much time to spend with them) and (2) the “early maturity” of children (wherein parents encouraged their children to be independent at an earlier age so as to prepare them for relatively earlier entry into industrialized U.S. society as productive workers).
Newly Industrialized Countries
The recent and ongoing industrialization of Brazil, Mexico, South Korea, India, China, Singapore, Taiwan, and other newly industrialized countries (NICs) is similar to the Industrial Revolution-based industrialization of the United States and the UK in several key ways. First, in a most basic sense, NIC industrialization involves: (1) the transition from a low-tech, small-scale, inefficient agricultural-based economy to one relying heavily on large-scale, heavily mechanized, and highly efficient goods and/or services manufacturing, and (2) the mass migration of persons from rural to urban locales. Similar too is the fact that industrialization drives significant increases in demand for and consumption of raw materials and other inputs to large-scale production and infrastructure development inherent in industrialization. Consider, in this regard, that it is estimated that China now consumes approximately one-third of the total global supply of iron, steel, and coal.
Similarities between industrialization manifest both today and in past centuries also exist with respect to the most commonly discussed outcomes of the process (e.g., increases in productivity, efficiency, and economic development). It is noted, for example, that China, for centuries a relatively isolated, inwardly focused peripheral nation in the background of the modern global economic system, has recently experienced significant industrialization-driven development. In this regard, the Chinese economy has not only become very global in nature but has also doubled in size every eight years over the course of the last three decades. In addition, during this same period of time, nearly 400 million Chinese people have emerged from poverty many of them by personally becoming part of the global economic system as a result of moving from farms in rural areas to goods manufacturing jobs in large cities.
However, the industrialization of the NICs differs in important ways from previous manifestations of the process. As suggested above with the example of China, but also very much the case with NICs such as South Korea, Taiwan, Hong Kong, and Singapore often referred to as the “Four Tigers” of southeast Asia-recent industrialization (and industrialization-driven development) often occurs at a much faster pace than in the past. This is, as will be subsequently discussed in greater detail, the result of technological advances employed in the focal industrializing country.
Also at variance with past industrialization is the sheer magnitude of the process today. This is particularly true with regard to China and India. The staggering extent of the industrialization processes in these two countries is without question largely attributable to the fact that they are far and away the two largest countries in the world. The magnitude of China’s industrialization is also a function of the fact that ruling members of Chinas centralized government do not need to be so worried about pleasing constituents and getting reelected (relative to their counterparts in democratically ruled nations. In this regard, Chinas industrialization had, as of the start of 2007, helped establish the nation as the global leader in the production of steel, coal, cement, TV sets, and cotton fabric it was also then ranked second in power generation, third in sugar production, and fifth in crude oil output. And, while the magnitude of China’s industrialization to date is unprecedented, it should be noted that in late 2007 it was announced by the Chinese National Bureau of Statistics that the country’s industrialization was then estimated to be only at its halfway point.
Another important difference between “old” and “new” industrialization involves identification of a set of distinctive factors driving the incidence of the process in some NICs. These factors include
– political stability and the creation and maintenance of foreign investor-friendly environments;
– economic and legal reforms aimed at strengthening definition and enforcement of property and other contractual rights;
– encouraging entrepreneurship amongst domestic businesspeople;
– centralized planning featuring observable and measurable development-related objectives tied to specific policies;
– an outward orientation wherein export production priorities are based on differentiation-based positioning against global competitors;
– careful choice of where and how to access factors of production the country does not have a competitive advantage in;
– the targeting of specific industries for growth via incentive programs and other forms of governmental support;
– providing governmental incentives that encourage a high rate of domestic savings;
– infrastructure spending and development (e.g., in transportation, education, training, and housing);
– making their domestic marketplaces open to foreign marketers (e.g., via reduction or elimination of many tariffs on imported goods); and
– the privatization of state-owned and operated industries (which allowed resources previously tied up in these typically inefficiently run enterprises to be invested in targeted industry development and other strategically important initiatives).
These factors facilitating modern NIC industrialization are based most significantly on analysis of the rapid industrialization-driven development success of South Korea, Taiwan, Hong Kong, and Singapore the “Four Tigers” of southeast Asia. These countries, long lesser-developed nations with high rates of poverty, began their involvement in the global economic system as export production platforms/goods assemblers for companies and consumers residing in affluent, industrialized nations (e.g., Japan and the United States). Each nation was able, through deployment of different combinations of these key factors, to establish itself as a major global player in selected industries eventually competing successfully against rivals from highly industrialized and developed nations.
A final major variation in “old” and “new” industrialization concerns the fact that the process today is often based far more heavily on advances in information technology (and their creative application). Fully comprehending the importance of this variance requires a brief historical review. Earlier, it was stated that the Industrial Revolution that began first in what is today the UK in the mid-late 18th century can be seen as but the first of as many as the three periods of industrialization-driven transformation that have reoriented the economic and social character of nations turning them into industrialized countries. The second such revolution, occurring most notably in the United States starting in the 1960s, involved a marked shift within the manufacturing sector established in the original Industrial Revolution. This shift involved transition toward an (intangible) services manufacturing-based economy and away from the factory-based production of (tangible) goods. Consider, in this regard, that in 1960 approximately 35 percent of the nonagricultural workforce in the United States produced goods, while about 65 percent were employed in services. By 2004 the percentage of U.S. nonagricultural workers manufacturing goods had fallen to roughly 17, while the percentage for services production had risen to approximately 83. This transition was driven, in part, by the fact that many goods manufacturing jobs in the United States were relocated to other nations with lower-cost labor (and other factors of production). This second industrial revolution led to what is today referred to as the “service economy” in the United States (and many other industrialized nations previously dominated by goods manufacturing).
What can be called “the third industrial revolution” is still in its early-mid stages. It is a distinctly high-technology revolution often referred to as “the information age.” This revolution is driven by the increasingly inexpensive and reliable global exchange of information. This in turn creates the possibility, for the first time in history, to readily transfer the production of certain types of services (e.g., telephone-based customer support, clerical work, and computer programming) to foreign (i.e., “offshore”) locations. This is particularly relevant for service marketers in already industrialized countries where the cost of labor is high relative to wages in lesser developed nations where (1) the technological infrastructure is capable of facilitating delivery of the focal service, and (2) an adequately sized workforce possessing the skills required to provide the service can be accessed. Thus, while industrialization today continues to involve the shift from self-sufficient agricultural activities in rural areas to the mechanized production of goods in urban areas, another key component of the process for some nations most notably India is a move toward building up the technological infrastructure and increasing the number of technically qualified persons so as to be able to provide “offshore outsourced” services to customers in other countries.
It should be noted that something that has evidently not changed with the recent wave of NIC industrialization is the existence of clear signs of the negative impact of the process. Working conditions in some factories in NICs (and many other lesser-developed nations) rival those of the United States and the UK during the early-mid years of the original Industrial Revolution. Much the same can be said with regard to pollution and its negative impact on the environment. In fact, with regard to the latter and perhaps not surprisingly given the unprecedented speed and magnitude of industrialization in recent years, some have voiced concern that levels of industrialization-driven pollution and environmental degradation are likewise unprecedented.
Take, for example, the troubling case of China, where industrial emissions are often at best loosely regulated and the vast majority of the massive supply of energy fueling industrialization comes from relatively, if not very dirty sources predominantly coal. Listed below are select findings of a late-2007 New York Times report addressing the magnitude of the health-related impact of Chinas soaring pollution problem.
– In 2006 levels of air pollution in Beijing were more than 300 percent above the level considered safe by the European Union.
– In 2007 two leading international environmental agencies concluded that China had by then become the world’s leading producer of greenhouse gases.
– It is estimated that only about one percent of the nearly 600 million persons living in urban environments in China breathe air considered safe by the European Union.
– Air and water pollution are now believed to collectively be the root cause of approximately 750,000 deaths each year in China.
– In 2007 the Chinese Minister of Health officially recognized that soaring levels of pollution had established cancer as the nations leading cause of death.
Contemplation of these and other similar data and estimates suggests that in order for the development-related potential of Chinas ongoing and already unprecedented industrialization to ever come close to being fully realized, Chinese governmental leaders face as arguably their greatest single challenge the cessation of practices that have led to the nations alarming industrialization-driven pollution situation. And, it should be noted that Chinas problem in this regard is so massive that it has spread well beyond its national borders. It is estimated, for instance, that emissions from industrial operations in China are at least partly to blame for (1) increasing levels of acid rain in South Korea and Japan and (2) much of the air pollution in Los Angeles, California. Finally, perhaps most importantly and potentially the greatest cause for concern of all it should be remembered, as previously stated, that China is presently at approximately the mid-point of its industrialization.